Mitt’s New Tax Plan: Dessert Now, Broccoli Later

In discussing Mitt Romney’s decision to offer some new tax cut proposals yesterday, I wondered whether Mitt would have the guts or deficit-hawk mojo to offer offsets by way of specific proposals to end tax expenditures, or would instead rely on supply-side pixie dust to make it all magically work out in the end.

It appears Romney is not explicitly opting for pixie dust, but nor is he going to get pinned down on any specific offsets. He is calling for “revenue neutrality” and insisting he won’t shift the tax burden down the income ladder–but he won’t tell us exactly what he’d do to to redeem either of those pledges.

Mr. Romney’s plan aims to balance two competing priorities of different Republican factions. By proposing to cut the top rate, he is seeking support among supply-side conservatives who contend that lower marginal rates are the key ingredient for producing economic growth.

But by vowing to offset the loss of revenue by eliminating some deductions, he is addressing concerns among deficit hawks about expanding the tide of red ink that has the federal government spending an estimated $1.3 trillion more than it takes in this year.

And by insisting that those unspecified reductions will fall most heavily on the affluent, he is seeking to limit a line of attack that portrays him as a wealthy former financial industry executive who himself has paid taxes at only around the 15 percent rate because most of his income comes from capital gains. Mr. Romney would maintain the current 15 percent rate on dividends and capital gains.

Yeah, that all makes sense, particularly from the point of view of a candidate who seems to view public policy as a series of political obstacles to negotiate rather than as a reflection of any particular convictions. But by failing to identify specific offsets, other than hinting that maybe the mortgage interest or charitable deductions might be limited for the very wealthy, Romney is in effect offering the dessert of tax cuts up front, with the less palatable solid nutrition that makes the plan work to be identified manana.

Is this approach ultimately any more honest than supply-side pixie dust? Hard to say, but it’s worth noting that Mitt Romney is not exactly a guy whose promises on any subject can be taken to the bank.